Download VTU (Visvesvaraya Technological University) MBA 3rd Semester (Third Semester) 16MBAMM301-Retail Management RM Chapter 2 Important Lecture Notes (MBA Study Material Notes)
Chapter 2
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Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
CLASSIFICATION?OF?
THEORIES
Theories are classified based on
Customer expectations
? Central place theory
? Gravitational theory
? Community building theory
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
CLASSIFICATION?OF?
THEORIES
Theories are classified based on
Customer expectations
? Central place theory
? Gravitational theory
? Community building theory
Environmental?/?natural?
selection?theory
? ? Survival of the fittest?
? Charles Darwin?s view that organism evolve and change on
the basis of survival of the fittest.
Retail Environment:
? Customers
? Competitors
? Changing Technology
? Legal environment
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
CLASSIFICATION?OF?
THEORIES
Theories are classified based on
Customer expectations
? Central place theory
? Gravitational theory
? Community building theory
Environmental?/?natural?
selection?theory
? ? Survival of the fittest?
? Charles Darwin?s view that organism evolve and change on
the basis of survival of the fittest.
Retail Environment:
? Customers
? Competitors
? Changing Technology
? Legal environment
Environmental?Theory
? Environment in which retailers operate is crucial
? Environment consists of social ,economic, technology , cultural
factors in which customers and retailers operate.
? It forces the retailer to evolve and change the strategy since it
affects sales , profitability and image.
? Growth or decline, success or failure, profit or loss ?depends
on environment
? Size , nature , type , timing , location-influenced by
environment
? Success-how quickly desired strategy is formulated to face
challenges brought through changing environment.
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
CLASSIFICATION?OF?
THEORIES
Theories are classified based on
Customer expectations
? Central place theory
? Gravitational theory
? Community building theory
Environmental?/?natural?
selection?theory
? ? Survival of the fittest?
? Charles Darwin?s view that organism evolve and change on
the basis of survival of the fittest.
Retail Environment:
? Customers
? Competitors
? Changing Technology
? Legal environment
Environmental?Theory
? Environment in which retailers operate is crucial
? Environment consists of social ,economic, technology , cultural
factors in which customers and retailers operate.
? It forces the retailer to evolve and change the strategy since it
affects sales , profitability and image.
? Growth or decline, success or failure, profit or loss ?depends
on environment
? Size , nature , type , timing , location-influenced by
environment
? Success-how quickly desired strategy is formulated to face
challenges brought through changing environment.
Retail?Life?Cycle
? Innovation
? Accelerated growth
? Maturity
? Decline
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
CLASSIFICATION?OF?
THEORIES
Theories are classified based on
Customer expectations
? Central place theory
? Gravitational theory
? Community building theory
Environmental?/?natural?
selection?theory
? ? Survival of the fittest?
? Charles Darwin?s view that organism evolve and change on
the basis of survival of the fittest.
Retail Environment:
? Customers
? Competitors
? Changing Technology
? Legal environment
Environmental?Theory
? Environment in which retailers operate is crucial
? Environment consists of social ,economic, technology , cultural
factors in which customers and retailers operate.
? It forces the retailer to evolve and change the strategy since it
affects sales , profitability and image.
? Growth or decline, success or failure, profit or loss ?depends
on environment
? Size , nature , type , timing , location-influenced by
environment
? Success-how quickly desired strategy is formulated to face
challenges brought through changing environment.
Retail?Life?Cycle
? Innovation
? Accelerated growth
? Maturity
? Decline
Cyclical?theories?
? It follows cyclical mode in business transaction.
Two types:
1. Wheel of retailing
2. Accordion theory
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
CLASSIFICATION?OF?
THEORIES
Theories are classified based on
Customer expectations
? Central place theory
? Gravitational theory
? Community building theory
Environmental?/?natural?
selection?theory
? ? Survival of the fittest?
? Charles Darwin?s view that organism evolve and change on
the basis of survival of the fittest.
Retail Environment:
? Customers
? Competitors
? Changing Technology
? Legal environment
Environmental?Theory
? Environment in which retailers operate is crucial
? Environment consists of social ,economic, technology , cultural
factors in which customers and retailers operate.
? It forces the retailer to evolve and change the strategy since it
affects sales , profitability and image.
? Growth or decline, success or failure, profit or loss ?depends
on environment
? Size , nature , type , timing , location-influenced by
environment
? Success-how quickly desired strategy is formulated to face
challenges brought through changing environment.
Retail?Life?Cycle
? Innovation
? Accelerated growth
? Maturity
? Decline
Cyclical?theories?
? It follows cyclical mode in business transaction.
Two types:
1. Wheel of retailing
2. Accordion theory
Mature retailer
Top Heavy
Conservative
Declining ROI
Innovative retailer
Low status and price
Minimum service
Poor facilities
Limited product offering
Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings
Vulnerability Phase
Entry Phase
Trading up Phase
A. Wheel of Retailing- described by McNair
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
CLASSIFICATION?OF?
THEORIES
Theories are classified based on
Customer expectations
? Central place theory
? Gravitational theory
? Community building theory
Environmental?/?natural?
selection?theory
? ? Survival of the fittest?
? Charles Darwin?s view that organism evolve and change on
the basis of survival of the fittest.
Retail Environment:
? Customers
? Competitors
? Changing Technology
? Legal environment
Environmental?Theory
? Environment in which retailers operate is crucial
? Environment consists of social ,economic, technology , cultural
factors in which customers and retailers operate.
? It forces the retailer to evolve and change the strategy since it
affects sales , profitability and image.
? Growth or decline, success or failure, profit or loss ?depends
on environment
? Size , nature , type , timing , location-influenced by
environment
? Success-how quickly desired strategy is formulated to face
challenges brought through changing environment.
Retail?Life?Cycle
? Innovation
? Accelerated growth
? Maturity
? Decline
Cyclical?theories?
? It follows cyclical mode in business transaction.
Two types:
1. Wheel of retailing
2. Accordion theory
Mature retailer
Top Heavy
Conservative
Declining ROI
Innovative retailer
Low status and price
Minimum service
Poor facilities
Limited product offering
Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings
Vulnerability Phase
Entry Phase
Trading up Phase
A. Wheel of Retailing- described by McNair
Wheel of retailing
Well known established theory of retail evolution
? This theory was developed by Malcom McNair
? Assumption that price sensitive consumer are not store loyal and
new retailers are in a better position to implement lower operating
cost .
? Entry phase: how new types of retailers enter the market as low
status, low rent location etc.
? Trade up Phase: retailer meet success, improve location, more
services etc.
? Vulnerability phase: marked as high cost structure and less
adaptability
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
CLASSIFICATION?OF?
THEORIES
Theories are classified based on
Customer expectations
? Central place theory
? Gravitational theory
? Community building theory
Environmental?/?natural?
selection?theory
? ? Survival of the fittest?
? Charles Darwin?s view that organism evolve and change on
the basis of survival of the fittest.
Retail Environment:
? Customers
? Competitors
? Changing Technology
? Legal environment
Environmental?Theory
? Environment in which retailers operate is crucial
? Environment consists of social ,economic, technology , cultural
factors in which customers and retailers operate.
? It forces the retailer to evolve and change the strategy since it
affects sales , profitability and image.
? Growth or decline, success or failure, profit or loss ?depends
on environment
? Size , nature , type , timing , location-influenced by
environment
? Success-how quickly desired strategy is formulated to face
challenges brought through changing environment.
Retail?Life?Cycle
? Innovation
? Accelerated growth
? Maturity
? Decline
Cyclical?theories?
? It follows cyclical mode in business transaction.
Two types:
1. Wheel of retailing
2. Accordion theory
Mature retailer
Top Heavy
Conservative
Declining ROI
Innovative retailer
Low status and price
Minimum service
Poor facilities
Limited product offering
Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings
Vulnerability Phase
Entry Phase
Trading up Phase
A. Wheel of Retailing- described by McNair
Wheel of retailing
Well known established theory of retail evolution
? This theory was developed by Malcom McNair
? Assumption that price sensitive consumer are not store loyal and
new retailers are in a better position to implement lower operating
cost .
? Entry phase: how new types of retailers enter the market as low
status, low rent location etc.
? Trade up Phase: retailer meet success, improve location, more
services etc.
? Vulnerability phase: marked as high cost structure and less
adaptability
Wheel of retailing
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
CLASSIFICATION?OF?
THEORIES
Theories are classified based on
Customer expectations
? Central place theory
? Gravitational theory
? Community building theory
Environmental?/?natural?
selection?theory
? ? Survival of the fittest?
? Charles Darwin?s view that organism evolve and change on
the basis of survival of the fittest.
Retail Environment:
? Customers
? Competitors
? Changing Technology
? Legal environment
Environmental?Theory
? Environment in which retailers operate is crucial
? Environment consists of social ,economic, technology , cultural
factors in which customers and retailers operate.
? It forces the retailer to evolve and change the strategy since it
affects sales , profitability and image.
? Growth or decline, success or failure, profit or loss ?depends
on environment
? Size , nature , type , timing , location-influenced by
environment
? Success-how quickly desired strategy is formulated to face
challenges brought through changing environment.
Retail?Life?Cycle
? Innovation
? Accelerated growth
? Maturity
? Decline
Cyclical?theories?
? It follows cyclical mode in business transaction.
Two types:
1. Wheel of retailing
2. Accordion theory
Mature retailer
Top Heavy
Conservative
Declining ROI
Innovative retailer
Low status and price
Minimum service
Poor facilities
Limited product offering
Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings
Vulnerability Phase
Entry Phase
Trading up Phase
A. Wheel of Retailing- described by McNair
Wheel of retailing
Well known established theory of retail evolution
? This theory was developed by Malcom McNair
? Assumption that price sensitive consumer are not store loyal and
new retailers are in a better position to implement lower operating
cost .
? Entry phase: how new types of retailers enter the market as low
status, low rent location etc.
? Trade up Phase: retailer meet success, improve location, more
services etc.
? Vulnerability phase: marked as high cost structure and less
adaptability
Wheel of retailing
ACCORDIAN THEORY: Hollander used analogy of an orchestra.
? Open accordions
? Closed Accordions
? Proposes the retail fluctuate from the strategy of offering many
merchandise categories with shallow assortment to the strategy of
offering a deep assortment with a limited number of categories.
? Expansion and contraction calls to mind an accordian
? Also termed as General Specific General Theory
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
CLASSIFICATION?OF?
THEORIES
Theories are classified based on
Customer expectations
? Central place theory
? Gravitational theory
? Community building theory
Environmental?/?natural?
selection?theory
? ? Survival of the fittest?
? Charles Darwin?s view that organism evolve and change on
the basis of survival of the fittest.
Retail Environment:
? Customers
? Competitors
? Changing Technology
? Legal environment
Environmental?Theory
? Environment in which retailers operate is crucial
? Environment consists of social ,economic, technology , cultural
factors in which customers and retailers operate.
? It forces the retailer to evolve and change the strategy since it
affects sales , profitability and image.
? Growth or decline, success or failure, profit or loss ?depends
on environment
? Size , nature , type , timing , location-influenced by
environment
? Success-how quickly desired strategy is formulated to face
challenges brought through changing environment.
Retail?Life?Cycle
? Innovation
? Accelerated growth
? Maturity
? Decline
Cyclical?theories?
? It follows cyclical mode in business transaction.
Two types:
1. Wheel of retailing
2. Accordion theory
Mature retailer
Top Heavy
Conservative
Declining ROI
Innovative retailer
Low status and price
Minimum service
Poor facilities
Limited product offering
Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings
Vulnerability Phase
Entry Phase
Trading up Phase
A. Wheel of Retailing- described by McNair
Wheel of retailing
Well known established theory of retail evolution
? This theory was developed by Malcom McNair
? Assumption that price sensitive consumer are not store loyal and
new retailers are in a better position to implement lower operating
cost .
? Entry phase: how new types of retailers enter the market as low
status, low rent location etc.
? Trade up Phase: retailer meet success, improve location, more
services etc.
? Vulnerability phase: marked as high cost structure and less
adaptability
Wheel of retailing
ACCORDIAN THEORY: Hollander used analogy of an orchestra.
? Open accordions
? Closed Accordions
? Proposes the retail fluctuate from the strategy of offering many
merchandise categories with shallow assortment to the strategy of
offering a deep assortment with a limited number of categories.
? Expansion and contraction calls to mind an accordian
? Also termed as General Specific General Theory
Conflict?theory/melting?pot?
theory
? Upgrading retail product & facilities because of competition -
Leads to development of two similar retailers.
? Dialectic process / melting pot theory
? Adopting the plan and strategies of competitors
? It includes process of antithesis, thesis & synthesis
? New retails institutions result from stores
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
CLASSIFICATION?OF?
THEORIES
Theories are classified based on
Customer expectations
? Central place theory
? Gravitational theory
? Community building theory
Environmental?/?natural?
selection?theory
? ? Survival of the fittest?
? Charles Darwin?s view that organism evolve and change on
the basis of survival of the fittest.
Retail Environment:
? Customers
? Competitors
? Changing Technology
? Legal environment
Environmental?Theory
? Environment in which retailers operate is crucial
? Environment consists of social ,economic, technology , cultural
factors in which customers and retailers operate.
? It forces the retailer to evolve and change the strategy since it
affects sales , profitability and image.
? Growth or decline, success or failure, profit or loss ?depends
on environment
? Size , nature , type , timing , location-influenced by
environment
? Success-how quickly desired strategy is formulated to face
challenges brought through changing environment.
Retail?Life?Cycle
? Innovation
? Accelerated growth
? Maturity
? Decline
Cyclical?theories?
? It follows cyclical mode in business transaction.
Two types:
1. Wheel of retailing
2. Accordion theory
Mature retailer
Top Heavy
Conservative
Declining ROI
Innovative retailer
Low status and price
Minimum service
Poor facilities
Limited product offering
Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings
Vulnerability Phase
Entry Phase
Trading up Phase
A. Wheel of Retailing- described by McNair
Wheel of retailing
Well known established theory of retail evolution
? This theory was developed by Malcom McNair
? Assumption that price sensitive consumer are not store loyal and
new retailers are in a better position to implement lower operating
cost .
? Entry phase: how new types of retailers enter the market as low
status, low rent location etc.
? Trade up Phase: retailer meet success, improve location, more
services etc.
? Vulnerability phase: marked as high cost structure and less
adaptability
Wheel of retailing
ACCORDIAN THEORY: Hollander used analogy of an orchestra.
? Open accordions
? Closed Accordions
? Proposes the retail fluctuate from the strategy of offering many
merchandise categories with shallow assortment to the strategy of
offering a deep assortment with a limited number of categories.
? Expansion and contraction calls to mind an accordian
? Also termed as General Specific General Theory
Conflict?theory/melting?pot?
theory
? Upgrading retail product & facilities because of competition -
Leads to development of two similar retailers.
? Dialectic process / melting pot theory
? Adopting the plan and strategies of competitors
? It includes process of antithesis, thesis & synthesis
? New retails institutions result from stores
CONFLICTUAL THEORY
Department Stores Individual retailers
Hypermarkets and
Supermarkets
Anti-thesis
Thesis
Synthesis
Retailing evolves through blending of two opposites to create
a new format.
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
CLASSIFICATION?OF?
THEORIES
Theories are classified based on
Customer expectations
? Central place theory
? Gravitational theory
? Community building theory
Environmental?/?natural?
selection?theory
? ? Survival of the fittest?
? Charles Darwin?s view that organism evolve and change on
the basis of survival of the fittest.
Retail Environment:
? Customers
? Competitors
? Changing Technology
? Legal environment
Environmental?Theory
? Environment in which retailers operate is crucial
? Environment consists of social ,economic, technology , cultural
factors in which customers and retailers operate.
? It forces the retailer to evolve and change the strategy since it
affects sales , profitability and image.
? Growth or decline, success or failure, profit or loss ?depends
on environment
? Size , nature , type , timing , location-influenced by
environment
? Success-how quickly desired strategy is formulated to face
challenges brought through changing environment.
Retail?Life?Cycle
? Innovation
? Accelerated growth
? Maturity
? Decline
Cyclical?theories?
? It follows cyclical mode in business transaction.
Two types:
1. Wheel of retailing
2. Accordion theory
Mature retailer
Top Heavy
Conservative
Declining ROI
Innovative retailer
Low status and price
Minimum service
Poor facilities
Limited product offering
Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings
Vulnerability Phase
Entry Phase
Trading up Phase
A. Wheel of Retailing- described by McNair
Wheel of retailing
Well known established theory of retail evolution
? This theory was developed by Malcom McNair
? Assumption that price sensitive consumer are not store loyal and
new retailers are in a better position to implement lower operating
cost .
? Entry phase: how new types of retailers enter the market as low
status, low rent location etc.
? Trade up Phase: retailer meet success, improve location, more
services etc.
? Vulnerability phase: marked as high cost structure and less
adaptability
Wheel of retailing
ACCORDIAN THEORY: Hollander used analogy of an orchestra.
? Open accordions
? Closed Accordions
? Proposes the retail fluctuate from the strategy of offering many
merchandise categories with shallow assortment to the strategy of
offering a deep assortment with a limited number of categories.
? Expansion and contraction calls to mind an accordian
? Also termed as General Specific General Theory
Conflict?theory/melting?pot?
theory
? Upgrading retail product & facilities because of competition -
Leads to development of two similar retailers.
? Dialectic process / melting pot theory
? Adopting the plan and strategies of competitors
? It includes process of antithesis, thesis & synthesis
? New retails institutions result from stores
CONFLICTUAL THEORY
Department Stores Individual retailers
Hypermarkets and
Supermarkets
Anti-thesis
Thesis
Synthesis
Retailing evolves through blending of two opposites to create
a new format.
Speciality store
High Margin
Low turnover
High service
Narrow variety
Deep assortment
Full line Discount
Store
Low margin
High turn over
Low prices
No service
Broad variety
Shallow assortment
Category Killer
Modest margins
Medium turnover
Low prices
Limited services
Narrow variety
Deep assortment
Thesis
Antithesis
Synthesis
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
CLASSIFICATION?OF?
THEORIES
Theories are classified based on
Customer expectations
? Central place theory
? Gravitational theory
? Community building theory
Environmental?/?natural?
selection?theory
? ? Survival of the fittest?
? Charles Darwin?s view that organism evolve and change on
the basis of survival of the fittest.
Retail Environment:
? Customers
? Competitors
? Changing Technology
? Legal environment
Environmental?Theory
? Environment in which retailers operate is crucial
? Environment consists of social ,economic, technology , cultural
factors in which customers and retailers operate.
? It forces the retailer to evolve and change the strategy since it
affects sales , profitability and image.
? Growth or decline, success or failure, profit or loss ?depends
on environment
? Size , nature , type , timing , location-influenced by
environment
? Success-how quickly desired strategy is formulated to face
challenges brought through changing environment.
Retail?Life?Cycle
? Innovation
? Accelerated growth
? Maturity
? Decline
Cyclical?theories?
? It follows cyclical mode in business transaction.
Two types:
1. Wheel of retailing
2. Accordion theory
Mature retailer
Top Heavy
Conservative
Declining ROI
Innovative retailer
Low status and price
Minimum service
Poor facilities
Limited product offering
Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings
Vulnerability Phase
Entry Phase
Trading up Phase
A. Wheel of Retailing- described by McNair
Wheel of retailing
Well known established theory of retail evolution
? This theory was developed by Malcom McNair
? Assumption that price sensitive consumer are not store loyal and
new retailers are in a better position to implement lower operating
cost .
? Entry phase: how new types of retailers enter the market as low
status, low rent location etc.
? Trade up Phase: retailer meet success, improve location, more
services etc.
? Vulnerability phase: marked as high cost structure and less
adaptability
Wheel of retailing
ACCORDIAN THEORY: Hollander used analogy of an orchestra.
? Open accordions
? Closed Accordions
? Proposes the retail fluctuate from the strategy of offering many
merchandise categories with shallow assortment to the strategy of
offering a deep assortment with a limited number of categories.
? Expansion and contraction calls to mind an accordian
? Also termed as General Specific General Theory
Conflict?theory/melting?pot?
theory
? Upgrading retail product & facilities because of competition -
Leads to development of two similar retailers.
? Dialectic process / melting pot theory
? Adopting the plan and strategies of competitors
? It includes process of antithesis, thesis & synthesis
? New retails institutions result from stores
CONFLICTUAL THEORY
Department Stores Individual retailers
Hypermarkets and
Supermarkets
Anti-thesis
Thesis
Synthesis
Retailing evolves through blending of two opposites to create
a new format.
Speciality store
High Margin
Low turnover
High service
Narrow variety
Deep assortment
Full line Discount
Store
Low margin
High turn over
Low prices
No service
Broad variety
Shallow assortment
Category Killer
Modest margins
Medium turnover
Low prices
Limited services
Narrow variety
Deep assortment
Thesis
Antithesis
Synthesis
Polarization?theory
? The reason to decline due to competition from multiples have
buying power and economies of scale
? Polarisation ? shift towards larger and smaller retailers with
medium sized businesses.
? Smaller retailer forced into bankruptcy due to economy in
operation for large retailers
FirstRanker.com - FirstRanker's Choice
Theories?in?Retailing?
Chapter 2
? NO?single?theory?can?be?universally?applicable?
? Theory? ? -A? well-substantiated? explanation? of?
some?aspect?of?the?natural?world;?an?organized?
system?of?accepted?knowledge?that?applies?in?a?
variety?of?circumstances?to?explain?a?specific?set?
of?phenomena?
These theories are based on:
?Competitive pressures and their importance
?Investments in organizational capabilities
?Creation of sustainable competitive advantage
?Implementation of strategic planning
?Needs of customer and his attitude
classification
? Environmental ? change in retail is attributed to the change in
the environment in which the retailer operate
?Environmental theory
? Cyclical ? Where a particular pattern and phases are identified
in the changes and similar pattern is observed in related issues
? Wheel of retailing
? Accordion theory
? Evolution Theory : Where a new format is developed by the
retailers as a result of intense competition or conflict between
two types of retailers
? Dialectic Process Theory
? Natural Selection Theory
? Polarization Theory
CLASSIFICATION?OF?
THEORIES
Theories are classified based on
Customer expectations
? Central place theory
? Gravitational theory
? Community building theory
Environmental?/?natural?
selection?theory
? ? Survival of the fittest?
? Charles Darwin?s view that organism evolve and change on
the basis of survival of the fittest.
Retail Environment:
? Customers
? Competitors
? Changing Technology
? Legal environment
Environmental?Theory
? Environment in which retailers operate is crucial
? Environment consists of social ,economic, technology , cultural
factors in which customers and retailers operate.
? It forces the retailer to evolve and change the strategy since it
affects sales , profitability and image.
? Growth or decline, success or failure, profit or loss ?depends
on environment
? Size , nature , type , timing , location-influenced by
environment
? Success-how quickly desired strategy is formulated to face
challenges brought through changing environment.
Retail?Life?Cycle
? Innovation
? Accelerated growth
? Maturity
? Decline
Cyclical?theories?
? It follows cyclical mode in business transaction.
Two types:
1. Wheel of retailing
2. Accordion theory
Mature retailer
Top Heavy
Conservative
Declining ROI
Innovative retailer
Low status and price
Minimum service
Poor facilities
Limited product offering
Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings
Vulnerability Phase
Entry Phase
Trading up Phase
A. Wheel of Retailing- described by McNair
Wheel of retailing
Well known established theory of retail evolution
? This theory was developed by Malcom McNair
? Assumption that price sensitive consumer are not store loyal and
new retailers are in a better position to implement lower operating
cost .
? Entry phase: how new types of retailers enter the market as low
status, low rent location etc.
? Trade up Phase: retailer meet success, improve location, more
services etc.
? Vulnerability phase: marked as high cost structure and less
adaptability
Wheel of retailing
ACCORDIAN THEORY: Hollander used analogy of an orchestra.
? Open accordions
? Closed Accordions
? Proposes the retail fluctuate from the strategy of offering many
merchandise categories with shallow assortment to the strategy of
offering a deep assortment with a limited number of categories.
? Expansion and contraction calls to mind an accordian
? Also termed as General Specific General Theory
Conflict?theory/melting?pot?
theory
? Upgrading retail product & facilities because of competition -
Leads to development of two similar retailers.
? Dialectic process / melting pot theory
? Adopting the plan and strategies of competitors
? It includes process of antithesis, thesis & synthesis
? New retails institutions result from stores
CONFLICTUAL THEORY
Department Stores Individual retailers
Hypermarkets and
Supermarkets
Anti-thesis
Thesis
Synthesis
Retailing evolves through blending of two opposites to create
a new format.
Speciality store
High Margin
Low turnover
High service
Narrow variety
Deep assortment
Full line Discount
Store
Low margin
High turn over
Low prices
No service
Broad variety
Shallow assortment
Category Killer
Modest margins
Medium turnover
Low prices
Limited services
Narrow variety
Deep assortment
Thesis
Antithesis
Synthesis
Polarization?theory
? The reason to decline due to competition from multiples have
buying power and economies of scale
? Polarisation ? shift towards larger and smaller retailers with
medium sized businesses.
? Smaller retailer forced into bankruptcy due to economy in
operation for large retailers
FirstRanker.com - FirstRanker's Choice
This post was last modified on 18 February 2020